Testing of hypothesis

Prof Swapna Tamhankar

 Data

Continuo
Discrete
us

Normal Binomial Poisson

Sampling

Mean Proportion

Estimatio Testing of
n Hypothesis
Testing of Hypothesis

Application

 Whether a production line process is out of control.

 Older customers are more brand loyal.
 Which management approach best motivates employees in the retail industry
 What is the most effective means of advertising in a business-to-business setting
Concepts

Hypothesis
1.State Null
Alternative
2.Calculate Test Statistics (Calculated)

3.Compare Critical value

(Tabulated)
4.Conclude Level of Significance
 Is the mean Is the mean Is the mean less
Research Question
different from k greater than k? than k

μ=k μ=k
Null μ=k

Alternate μ≠k μ>k μ<k

Two-tailed, non- Right-tailed, Left-tailed,

Type of test
directional directional directional
Testing of Hypothesis – One sample test for Mean
 A study by Nielsen India, shows that Steps
1. State Null and
women are as engaged as men on Alternative Hypothesis
social networking apps, spending on 2. Find test statistics
an average 240 minutes per month on (calculated value)

them with a standard deviation as 20. 3. Find the tabulated

value based on level of
A recent sample of 64 women from a significance
business seminar yields an average of 4. State the decision rule
250. Can we conclude at 0.05 level of 5. Conclude

significance that
i. The average time has increased
Testing of Hypothesis – One sample test for Proportion
 A global study on consumers laundry
cleaning preferences shows that 54%
1. State Null and
say good price/value Steps is very Alternative
Hypothesis
important.
2. Find test statistics
 A sample of 196 respondents from (calculated value)
3. Find the tabulated
India was collected for a similar study. value based on
level of
104 respondents have said good significance
price/value is very important to them. 4. State the decision
rule
 Using a significance value of 0.01 can 5. Conclude

we conclude that They are equally

conscious than their global parts
Contd
Suppose that in past years the average price per
square foot for warehouses in the United States has
been $32.28. A national real estate investor wants to
determine whether that figure has changed now.
 A sample 49 warehouses have a mean price per
square foot of $31.67, with a standard deviation of
$1.29.
 Assume that prices of warehouse footage are
normally distributed in population. Using a 5% level
of significance, can we conclude that average price
per square foot have reduced.
 The Independent Insurance Agents of America
conducted a survey of insurance consumers and
discovered that 48% of them always reread their
insurance policies.
 Suppose a large insurance company invests considerable
time and money in rewriting policies to make it an easy
read.
 The company wants to determine whether rewriting the
policies significantly has increased the proportion of
people who always reread their policy.
 They contacted 380 of customers who purchased a
policy in the past year and asked them whether they
always reread their insurance policies. 164 responded
that they do.
 Use a 1% level of significance to test the hypothesis.